June 14, 2001

Renovation projects, leases okayed by property & facilities committee

The Board of Trustees property and facilities committee on June 8 approved seven Pitt building renovation projects and three lease arrangements.

Leases

The biggest, and most complicated, lease involves the relocation of Pitt's football program to the South Side UPMC Sports Performance Complex. At an initial annual cost of $850,000, the University will lease 55,941 square feet of space at the complex from UPMC Presbyterian. The lease term is for 29 years and one month, beginning on July 31, 2001, and includes one 14-year renewal option term to be exercised 180 days prior to the expiration of the initial term, at a rate to be agreed upon by both parties. Reimbursement for all operating expenses incurred at the facility will be paid as additional rent. The estimated recurring annual operating expense for the facility is $678,940.

Simultaneously, Pitt and UPMC Health System will enter into a 29-year sponsorship agreement whereby the system will pay the University $750,000 per year for the first 10 years, increasing in the 11th year to $850,000 per year for the remaining 19 years of the agreement. These funds will offset Pitt's annual rental cost for the UPMC Sports Performance Complex.

Pitt had budgeted $603,000 to operate Pitt Stadium. These funds will be allocated to the football program to cover operating expenses at the UPMC Sports Performance Complex. The University administration has increased the football program's budget by $175,940 to provide additional funding needed for the lease agreement.

Pitt's lease and operating expenses of $1,528,940 for the initial lease will be funded by the $750,000 UPMC Health System agreement, the Pitt Stadium operating expenditure of $603,000 and the budget increase of $175,940.

Pitt and the Pittsburgh Steelers are negotiating details of a lease for the Panthers to play home football games in the Steelers' new stadium, beginning this fall. The lease will pay for expenses associated with Pitt's use of the stadium and also will give the Steelers a percentage of Pitt ticket revenues, said Executive Vice Chancellor Jerome Cochran.

Trustees approved leasing 6,000 square feet of office space at 3518 Fifth Ave. to house the medical school's Department of Family Medicine. The lease with Roam Investments, Inc., is for five years (July 1, 2001 through June 30, 2006) at an initial annual cost of $129,000, with rent increases in the third, fourth and fifth years. Taxes and insurance over $10,974 will be paid as additional rent.

The family medicine department currently has offices in Scaife Hall, UPMC Shadyside and St. Margaret's Hospital. The space at 3518 Fifth Ave. will allow for family medicine personnel to be housed in one location and provide room for expansion, while freeing up University-owned space currently occupied by the department, according to a background statement distributed to trustees.

"Upon reviewing space options in Oakland, it was determined that there were no University-owned buildings with the availability to accommodate the family medicine department in one location and offer growth possibilities," the statement said.

The University plans to expand and reorganize the family medicine department under its newly recruited chairperson, Jeannette South-Paul.

Pitt will have the option of renewing the lease for two additional five-year periods at the then-current fair market rate for comparable space in Oakland.

Trustees approved extending Pitt's lease of space at the Bellefield Professional Building at 130 N. Bellefield Ave. for another five years. The Graduate School of Public Health's epidemiology department occupies 16,209 square feet of space on the third and fourth floors.

The current lease expires on June 30. Trustees approved extending the lease through June 2006, at an annual rent of $364,702, to be adjusted annually based on an additional sum of 51 percent of the amount by which operating expenses have increased annually.

Pitt can terminate the lease at the end of the third or fourth year by providing at least six months' written notice to NDC Real Estate Management, Inc.

Renovation projects

Trustees approved a $1.4 million renovation of the Cathedral of Learning's 35th and 36th floors for the University Honors College. Private gifts will fund the project, scheduled for the 2001-2002 fiscal year.

Currently, the Honors College occupies 2,380 square feet of the 35th floor. The project will expand the Honors College to the 36th floor, renovate the 35th and 36th floors, and connect them with a staircase.

Under a planned $9.5 million project, the existing 34,000 square feet of space at the Bradford campus's Frame-Westerberg Student Union will be renovated and an 11,000 square foot addition will be constructed. Trustees approved the project's first phase.

Funding sources for the $9.5 million project are expected to include $4.3 million in educational and general (E&G) budget debt, $2.7 million in auxiliary debt, a $2 million gift and $500,000 in auxiliary reserves.

Trustees approved the first stage of a $1.9 million project to install a fire alarm/sprinkler system in the Litchfield Tower B residence hall. Auxiliary reserves will fund the project, scheduled for the 2001-2002 fiscal year.

Last year the property and facilities committee approved construction of the South Side Works Building(housing the McGowan Center for Artificial Organ Development) at a total cost of $10.2 million, with an annual operating cost, including debt service, of $859,281.

The project now is expected to cost $11.4 million. Because the current estimated cost turned out to be more than 2.5 percent above the original estimate, the property and facilities committee was required to review the project. Committee members voted last week to proceed with the project, which will be funded by Health Sciences debt ($6.1 million) and unexpended funds from the McGowan Center ($5.3 million), with annual operating costs (including debt service) of $631,189.

Trustees approved spending $6 million in state funds to upgrade and/or replace the Chevron Science Center's ventilation system. The project will bring the system into compliance with federal, state and local codes and regulations, as well as with the Americans With Disabilities Act and research funding agencies' requirements.

The Chevron center, constructed with state funds in 1972, houses Pitt's chemistry department. According to a statement distributed to property and facilities committee members, "The building's ventilation system has reached the end of its useful life, it no longer meets regulatory requirements, and it cannot accommodate the needs of today's teaching and research laboratories."

Should the renovation require temporarily relocating personnel, Pitt will need to allocate money for those moves. State funds cannot be used for that purpose.

The property and facilities committee approved spending $1.7 million in state funds next year for design work on a renovation of Hillman Library. The building, constructed in 1967, "needs a complete renovation in order to accommodate the services required by the University community," according to a background statement.

Trustees also okayed spending $5.7 million in state funds for a complete renovation of the Johnstown campus's Owens Library. The project will include replacing the roof, abating hazardous materials, renovating interior space, and upgrading all building systems, including telecommunications, data and video.

The trustees have authorized the property and facilities committee to approve construction projects of more than $1 million and to oversee property transactions in excess of $500,000.

At its June 28 meeting, the full board is expected to approve including the projects and leases in Pitt's capital budget for the fiscal year that begins July 1.